Investor Report Caribbean: The gathering storm

The Caribbean appears increasingly fragile as governments struggle to balance economies amid a pullback in traditional sources of foreign investment

By Canute James

For Peter Phillips, Jamaica’s finance minister,
the outlook is grim: "Our debt to GDP ratio was 128% at the end
of March," he said in assessing the immediate challenges to the
economy.

"This debt has now become a burden that places a
stranglehold on our capacity to fund vital social services as
well as the capital investments required to support sustained
growth."

Phillips is not alone: his counterparts across the region
are facing a similar set of challenges. Their weak, open
economies have borrowed increasingly to fend off the effects of
years of weak global growth. And it is becoming increasingly
hard for them to take on fresh debt as interest rates soar and
their creditability falls. Fiscal deficits are increasing and
– with a few exceptions – governments are
hard pressed to meet local and foreign debt obligations.